Three local boards met together April 13 to discuss the financial and operational future of South Central Kansas Medical Center.

In the highly attended meeting between the SCKMC Board of Trustees and the the Public Building Commission (PBC), which includes the five members of the City Commission of Arkansas City, the future of the hospital and the composition of its board of trustees were discussed.

The meeting, held at the Water Treatment Facility, was called due to continued concerns about the hospital’s financial state and the possibility of reducing the number of individuals who serve on the board. No action was taken at the April 13 meeting, which consisted of discussion only.

PBC members absent from the meeting were David Billings, Mike Munson and Shandon Weston. Vice chair Angela Bruce was in attendance.

SCKMC board members absent from the meeting were Dr. Perry Lin, Dr. Jerry Old and secretary Karen Zeller. The board was represented by chair Carol Hearne, vice chair Hap McLeod, treasurer JoLynn Foster, Mark Paton, Dr. Nick Rogers and Dr. Robert Yoachim.

All five city commissioners were present at the meeting, as were City Attorney Tamara Niles and City Manager Nick Hernandez. Tonight, the commissioners will be discussing who to appoint to replace Hearne and Rogers on the board. There are 12 candidates for the two seats.

Getting started

“I will start with what has started it on our end as city commissioners,” said Mayor Dan Jurkovich. “There’s only one thing that we as the City Commission have any sway over, and that is the board.”

The meeting was a chance for the hospital board members to give feedback on the possibility of changing the board, according to Jurkovich.

“The first thing that I really wanted to do is have the city attorney refresh (us) on the relationship between the City Commission, hospital board and PBC,” he said. Another thing he said he wanted to address had to do with the relationship between the boards.

“There does seem to be an underlying tension … but we need to be working together,” Jurkovich said.

Niles provided some background into the way the three boards were intended to interact with each other.

The SCKMC board exists via charter ordinance. There are state statutory provisions that define the makeup and functionality of the board.

The City of Arkansas City owns the property that the hospital sits on, but the hospital itself belongs to the PBC.

The PBC leases the hospital to the city, which then subleases the building to the SCKMC Board of Trustees, according to Niles.

“(And) the commission’s responsibility is?” Jurkovich asked.

“To make sure the hospital makes the bond payments,” Niles replied, “because if the hospital doesn’t, the city has to.”

To downsize or not?

There currently are nine members of the SCKMC Board of Trustees, including the hospital’s chief of staff.

Jukovich questioned whether that number is too high and if the board functions with such a large number of trustees.

“When I go to board meetings, it seems there are too many people in the room for there to be a good, in-depth conversation,” Jurkovich said.

“But, however, most of the people aren’t board members that are in the room,” Foster replied.

“(It’s like) nobody wants to ruffle feathers,” Jurkovich said.

Hearne said the board is hesitant to talk openly because the meetings are open to the public.

“I think JoLynn (Foster) is right. If it was just the board members in there, there would be a lot more discussion,” Hearne said.

Term limits and liability

Under the current charter ordinance, the SCKMC board members are limited in the amount of time they can serve on the board to two consecutive terms of four years each. Members can take two years off and then be eligible to serve again.

Jurkovich said that he would like to see the board limited to four members, plus a voting city commissioner, or a five-person board with a non-voting city commissioner.

Hearne countered that the city could take the hospital back under its wing, and pay salaries for the employees and staff, as was the setup prior to 1981.

Rogers said the reorganization of the hospital happened primarily because the city was vulnerable to liability, which was discovered when a large lawsuit was filed in the early 1980s against a doctor and the city.

“The college has eight board members and functions just fine,” said Foster, who also chairs the Cowley College Board of Trustees.

However, the college board has violated the Kansas Open Meetings Act (KOMA) in the past few years and was accused earlier this year by citizens of infringing on their right to free speech under a new comments policy.

Committees and communications

Some board members said that if the board were to be reduced in size, there would be potential issues where committees were concerned.

If the board was limited to five members, a committee meeting with three members present would qualify as an open meeting under KOMA.

“You can get a board too big,” said Commissioner Jay Warren, citing turnaround times for decisions being less with a smaller board.

“I’m more in favor of smaller boards, but this board seems to be a functional board,” Paton said.

McLeod said it seemed the main problems are communications and financial issues at the hospital.

“You’re trying to solve it with board members,” he said. “If you change board terms limits, make them longer. I don’t think you’re going to change a communications issue with a board change.”

Lack of vision?

One big issue that came out of the discussion seemed to be uncertainty regarding the future direction of SCKMC.

“I don’t disagree with Mark (Paton),” agreed Rogers, who said there has been a lack of vision at the board level.

“It seems like we’ve taken a shotgun approach. I really don’t know where we’re headed,” he said.

“It’s certainly obvious we built a hospital thinking of the way it was on Birch (Avenue),” said Commissioner Karen Welch.

She said there wasn’t any allowance made for specialty hospitals.

“We had a big paradigm shift in hospital thinking from when it was built to today,” Welch said.

“There was a vision when the hospital was built, and it would be nice to have another vision,” McLeod said.

But changes in the medical industry and reductions in reimbursement rates make it difficult to have that vision, he admitted.

Transparency and confusion

The only general consensus of those gathered around the table was that there needs to continue to be a hospital in Arkansas City.

“I don’t care who’s on (the board), who’s off, who’s feelings get hurt, who’s feelings don’t get hurt — we need this hospital,” said Commissioner Kanyon Gingher.

“We need it for the people of the city, or the service area. Whatever it takes to get to there, that’s what we’re going to do. Whether we do it as this group or that group … We’ve got board members who can’t answer questions, we’ve got citizens that don’t know, we got media that doesn’t know. We need answers to questions, straight up.”

“Do we have an (intensive care unit)?” Gingher asked of those assembled, including several SCKMC staff members.

“No,” Rogers replied. “Yes,” SCKMC Chief Executive Officer Virgil Watson said at the same time.

“So I got a ‘yes’ from the CEO and a ‘no’ from a board member,” Gingher said. “That’s what I’m saying. … we need to understand the same thing, so when the public asks us, we have an answer.

“They said they want this hospital with their votes.”

Role of the hospital board

Gingher said it doesn’t matter who sits in the seats of either board — the citizens want answers to questions, but there do not seem to be any.

“You effectively said the board doesn’t know,” McLeod said. “You can’t answer the questions,” Gingher replied.

“I’m not expected to know — I’m a board member. I’m in there once a month. The CEO and the management should have the answers, and we ask a lot of questions,” McLeod said.

“Do you have an ICU? It’s a pretty basic question,” Gingher said. “You have to come together and have one answer.”

“You know what I’m concerned about? Operating cash flow,” McLeod said. “I’m not getting a good answer about that and I’m not happy about it.

“The problem is communications.”

Anyone can come to a board member and ask questions about the details, he said.

Communicating finances

“What you guys want to know, what everybody wants to know, is the hospital well run — and it is — and how are we going to dig out of this financial mess?” McLeod said.

He contended that if the government doesn’t find a way to regulate the way Medicare and Medicaid services are reimbursed, the citizens could be looking at even higher sales taxes in order to keep the hospital open.

“Here’s where my problem is: You said that you want to know where the cash flow is, but you don’t feel you’ve been told,” Jurkovich said.

“We’ve been told. I think (the numbers are) accurately put together. They just need to be presented differently,” McLeod said.

“What I’m saying is, if there are communication issues, they need to be resolved,” Jurkovich said.

In particular, he referenced communications about money matters.

“We’ve been told so many things that do not work out or do not come to pass. … Every time there’s a request for money, we didn’t know that (it was) needed,” Jurkovich said.

Board members were asked outright if there is a plan to cover costs when the half-cent sales tax drops off April 1, 2019, less than a year from now. No board member could say if a plan has been made to try for an additional sales tax.

Quorum report

It was also learned during the meeting that the SCKMC board never was shown a productivity report that was generated in the fall of 2016.

The Quorum Health Resources study was mandated in a document outlining SCKMC’s construction bonds, which includes audits performed before the bonds were issued and the issuance of the bonds themselves. The in-depth report to the PBC cost the city $175,000.

The 800-page bond document demands that defaulting on bond payments will result in the SCKMC Board of Trustees “immediately” employing a health care consultant “to make recommendations with respect to the hospital’s rates and charges.”

There are several ways the bond payments can come into default, according to the bond documents, including technical defaults such as the one SCKMC had in early February 2016, when its financials showed a ratio of less than 1.00 from cash on hand to the dollar amount of the bond payment that was due.

The PBC and City Commission viewed the report during an executive session in 2016, due to the personnel issues highlighted in the report.

Hernandez said he provided a copy of the Quorum report to Watson, but SCKMC board members said they never received a copy of the report.

Watson said the report wasn’t made available because there was confusion about whether the information could be shared with the board.

He was instructed to make a redacted copy available to all nine trustees by the end of this week.

Watson’s new plan

Since the Quorum report is already more than a year old, the hospital hired Carmine Di Palo as a consultant to identify areas of improvement.

“Quorum was a snapshot,” Watson said.

“We have a plan for the future,” he said as he passed out a sheet of paper that outlined the newest plan to improve SCKMC’s finances.

This checklist includes six areas of improvement, which could generate an estimated savings of $1.74 million, according to the handout.

The first item is the implementation of an urgent care clinic in the emergency department by June 1.

Estimated income for the program is $600,000 — savings that would be generated by redirecting traffic from the emergency department to an urgent care setting that is more appropriate for non-emergency ailments such as colds, minor cuts and burns or minor allergic reactions.

The second item on the checklist already has been implemented — an increase in cafeteria prices, which could result in a $300,000 increase.

Other measures include eliminating traveling nurses and telemedicine services, which should save a total of $420,000; increasing the surgery department’s productivity, which would bring in an estimated $300,000; and sharing Dr. Lin with Ponca City, which would save $100,000.

The informational sheet also stated Winfield Medical Arts (WMA), a clinic purchased by the hospital in late 2017, is not as productive as staff had anticipated.

“In the first two months of 2018, the WMA clinic has underperformed compared with the initial expectations at the time of acquisition” it states.

“In order to rapidly bring the WMA clinic to break-even, employed physicians’ guaranteed portion of their respective contracts will be downward(ly) revised.”